Economy

BEIJING (Reuters) – Chinese President Xi Jinping said on Tuesday China hopes Spain will give Chinese enterprises fair, transparent and non-discriminatory market treatment, state television CCTV reported.China welcomes more enterprises and goods from Spain to enter the Chinese market, Xi told Spanish Prime Minister Pedro Sanchez at the G20 summit, CCTV said. More

Investing.com — The Federal Reserve’s vice-chair Lael Brainard reckons the Fed can start slowing its rate hikes “soon.” U.S. producer price data for October and Walmart earnings may shed light on how soon that may be. China’s industry and retail sales both weakened markedly in October, providing a fresh headwind to crude oil prices. Amazon is looking at mass layoffs to restore profitability, and the first substantial filing from FTX’s bankruptcy says the collapsed crypto exchange may have up to 1 million creditors. Here’s what you need to know in financial markets on Tuesday, 15th November. 1. Brainard sees slowdown in rate hikes “soon;” PPI data dueLael Brainard, vice-chair of the Federal Reserve, said that the Fed may be able to slow the pace of interest rate hikes going forward. The comments, coming from the central bank’s most senior economist, are the clearest indication yet that the Fed is beginning its long-awaited “dovish pivot” as inflation starts to fall.“It will probably be appropriate soon to move to a slower pace of increases,” Brainard told Bloomberg, although she added “I think what’s really important to emphasize: We’ve done a lot, but we have additional work to do.”Benchmark 2-Year Treasury note yields, sensitive to expectations for Fed rates, eased another 8 basis points on the comments to trade at 4.35% by 06:00 ET (11:00 GMT). The comments came ahead of U.S. producer price data for October, which are expected to confirm a downward trend that has been in place for six months already.2. Chinese output, retail sales weaken; COVID spread casts doubt on rules relaxationThere was fresh evidence of the steam coming out of the global economy overnight, as Chinese data for industrial production, retail sales and fixed asset investment all fell short of estimates under pressure from the ongoing real estate crisis and recurring localized COVID-19 lockdowns. The output and investment data illustrate why the government extended a deadline for banks to reduce their exposure to real estate developers on Monday, a policy that was tightening financial conditions for the sector still further.Industrial output growth slowed to 5.0% while retail sales turned negative in year-on-year terms.Lockdowns are likely to persist in the near future, despite signs of the government marginally relaxing its quarantine requirements. The nationwide incidence of cases has spiked to its highest level since April in recent days, and while the omicron strain of the virus appears to be less virulent than previous dominant strains, it still represents a significant threat to public health, given the lower efficacy of Chinese vaccines.3. Stocks set to open higher; Amazon lay-offs, Walmart, Home Depot earnings in focusU.S. stock markets are set to open a little higher, supported by the comments from Brainard. Investors will have one eye firmly on how the PPI reacts to the latest strength in energy prices and the other on earnings from retail bellwethers Walmart (NYSE:WMT) and Home Depot (NYSE:HD), the latter being first out with a modest beat on top and bottom lines.By 06:15 ET, Dow Jones futures were up 120 points or 0.4%, while S&P 500 futures were up 0.7%, and Nasdaq 100 futures were up 0.2%.Tech was supported by fresh evidence of cost-cutting to restore profitability, as The Wall Street Journal reported that Amazon (NASDAQ:AMZN) is looking at up to 10,000 corporate job cuts (not to be confused with the temporary surge in hiring around the holiday season).4. FTX bankruptcy ain’t getting any prettierCollapsed cryptocurrency exchange FTX posted the first real details of its bankruptcy with the responsible court in Delaware, saying it may have up to 1M creditors.The details surrounding FTX’s collapse get uglier by the day, with fresh indications that the heist it reported at the weekend, which drained some $400M of its remaining liquid assets, may have been an ‘inside job’, rather than an exploit by experienced hackers.Research from Arkham Intelligence suggested that the hackers panicked after withdrawing the amount from FTX wallets, losing significant amounts of their token holdings as they moved assets across different chains.Reuters had reported at the weekend that FTX founder Sam Bankman-Fried had personally inserted a ‘back-door’ into the company’s software, allowing him to move client funds to his hedge fund affiliate Alameda Research without being detected.5. Oil slips on China data; IEA raises 2022 demand forecast, trims 2023Crude oil prices eased further on the weak economic data from China, ignoring the International Energy Agency, which had to revise up its lowball estimates of demand growth in the fourth quarter of this year.It also trimmed its forecast for average demand growth next year by 40,000 b/d to 1.6M barrels a day next year from 2.1M b/d in 2022, a revision entirely due to the outlook in China. The market is likely to stay tight, however, due to continued pressure on Russian output from sanctions, it reckons.By 06:30 ET, U.S. crude futures were down 0.5% at $85.44 a barrel, while Brent futures were down 0.3% at $92.83 a barrel. More

The RBI has already raised rates by 190 bps since May, to 5.90%, as it battles to reign in inflation that has stayed above its 2%-6% tolerance band for ten straight months now. Its Monetary Policy Committee (MPC) will next meet on Dec. 7.Still, inflation eased to a three-month low of 6.77% in October from a five-month high of 7.41% in September, helped by a slower rise in food prices and a higher base effect, which economists said would mean smaller rate hikes going forward.”Our base case envisages a 35 bps hike in December and a final 25 bps hike in February for a terminal repo rate of 6.50%,” said Nomura economists, Sonal Varma and Aurodeep Nandi. Barclays (LON:BARC) expects inflation to ease further to 6.5% in November and also forecasts a 35 bps hike next month, before the RBI shifts to a neutral stance.Meanwhile, India Ratings expects an even sharper pullback given that the central bank has a front-loaded monetary tightening policy.”We expect a status quo or, at best, a 25 bps rate hike in December.”Kotak Mahindra Bank said while inflation remains elevated, it likely peaked in September and favourable base effects would guide the inflation trajectory to below 6% from March.The private lender’s economists also expect a 35 bps hike in December and expect the MPC members to evaluate the impact of “previous rate hikes, improving sowing patterns of wheat and seasonal fall in perishable food items, and spillovers from global slowdown on the domestic economy.”The spate of relatively large rate hikes has sparked concerns that the battle against inflation could risk curbing economic growth as well, a view that Nomura’s Varma and Nandi say could force the central bank’s hand to even pause hikes.”Based on our view that growth signals will incrementally start worsening and given the current split within the MPC, there is a risk the RBI may deliver a final rate hike in December and then opt for a pause.” More

Shoppers are expected to continue to splurge on luxury goods in spite of a possible global recession, boosting the €353bn sector by “at least” 3 to 8 per cent next year, according to research. The joint forecast from analysts at Bain & Co and Altagamma comes on the back of another strong year for luxury goods, with sales up 15 per cent at constant exchange rates between 2021 and 2022 against soaring inflation and rolling Covid-19 lockdowns in China. However, most of that growth — about 60 per cent — had been driven by price increases of handbags and other core luxury items, the report said.Executives at top luxury companies have been cautiously upbeat on recent earnings calls, with sector leader LVMH recording a 19 per cent year-on-year sales jump in the third quarter, while Gucci owner Kering and rival Hermès both posted increases of 14 per cent. “[An economic downturn] has not materialised into full swing yet . . . if ever it does,” Jean Jacques Guiony, chief financial officer of LVMH, said in a call with investors last month.Although luxury was not “recession-proof”, it was better placed to weather financial shocks than during the 2008-9 financial crisis, Claudia D’Arpizio, partner at Bain & Co, told the Financial Times. That is because sales are now more concentrated among ultra-wealthy individuals whose disposable income is unlikely to be affected by an economic downturn. The top 2 per cent of spenders now accounted for 40 per cent of sales, compared with 35 per cent in 2009, D’Arpizio said. “These customers were a big lever of resiliency, and they don’t necessarily shop in stores; they are more into private events, personal shopping. Brands can work with them even when shops are closed,” she added.

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Positive tailwinds from the pandemic were also compensating for sinking confidence in the global economy. Covid-19 made consumers “more accustomed to a turbulent [economic] environment”. Moreover, additional savings from the pandemic — to the tune of €3tn globally — had also encouraged luxury purchases as customers sought to refresh their wardrobes, D’Arpizio said. And in contrast to 2008-9, consumers were not ashamed to show off their luxury purchases.Although the Chinese luxury market has yet to recover from the pandemic, if it were to relax its zero-Covid policy and travel restrictions, luxury sales would probably hit the top of Bain’s growth forecast of about 6 to 8 per cent next year. Last week, Beijing reduced its coronavirus quarantine requirements for close contacts and international travellers, though its zero-Covid stance remains firm.Global luxury growth is expected to accelerate further after 2023, with Bain forecasting a sales increase of 60 per cent from 2022 to 2030. While there will not be “another China” to drive a huge influx in spending, people becoming wealthier in regions including India, South Korea and Mexico will lead to about 10mn new luxury consumers per year.Young shoppers will also play a significant role with Generation Z — those born between 1997 and 2012 — expected to account for about a third of luxury purchases by the end of the decade.These young shoppers are entering the market earlier than their millennial predecessors, buying their first luxury goods at around age 15 versus 18 to 20, which Bain attributes to brands’ strong digital communications strategies and the expansion of product categories, such as trainers and casual-wear, relevant to teenagers. Unlike previous generations, who tended to reject the brands favoured by their parents, young entrants like the same luxury brands that older buyers do — which is more goods news for sector leaders. More

NUSA DUA, Indonesia/SHARM EL-SHEIKH, Egypt (Reuters) – A coalition of countries will mobilise $20 billion of public and private finance to help Indonesia shut coal power plants and bring forward the sector’s peak emissions date by seven years to 2030, the United States, Japan and partners said on Tuesday.The Indonesia Just Energy Transition Partnership (JETP), more than a year in the making, “is probably the single largest climate finance transaction or partnership ever”, a U.S. Treasury official told reporters. The Indonesia JETP is based on last year’s $8.5 billion initiative to help South Africa more quickly decarbonise its power sector that was launched at the COP26 climate summit in Glasgow by the United States, Britain and European Union.To access the programme’s $20 billion worth of grants and concessional loans over a three- to five-year period, Indonesia has committed to capping power sector emissions at 290 million tonnes by 2030, with a peak that year. The public and private sectors have pledged about half of the funds each.Indonesia has also set a goal to reach net-zero emissions in its power sector by 2050, a decade before its current target in its national climate plan, and to double the pace of renewable energy deployment so that it accounts for at least 34% of all power generation by 2030.”We’ve built a platform for cooperation that can truly transform Indonesia’s power sector from coal to renewables and support significant economic growth,” U.S. Special Envoy on Climate Change John Kerry said. EARLIER PEAK The Treasury official said peak power emissions for Indonesia in 2030 under the plan would be at a level 25% lower than their currently estimated peak in 2037. Indonesia’s annual emissions reduction over those years would be larger than Britain’s annual power sector emissions, the official said.The plan will eliminate 300 million tonnes of greenhouse gas emissions through 2030 and a reduction of well over 2 billion tonnes through 2060, the partners said in their statement.”Indonesia is committed to using our energy transition toachieve a green economy and drive sustainable development,” President Joko Widodo said in a statement. “This partnership will generate valuable lessons for the global community.”U.S., JAPAN LEADThe United States and Japan are co-leading the effort with Indonesia on behalf of the other G7 democracies Britain, Canada, France, Germany, Italy, as well as partners Norway, Denmark and the European Union.Multilateral development banks and the Climate Investment Funds will account for about a third of the $10 billion in public funding for Indonesia’s JETP, CIF head Mafalda Duarte told reporters. CIF has allocated about $500 million to aid Indonesia’s energy transition.”There is a recognition that this is the first move, a first package of support, and that more will be needed,” Duarte said when asked about the adequacy of the JETP funding. On Monday, Japan announced it would help Indonesia transition away from coal power through public and private institutions, including the state-affiliated Japan Bank for International Cooperation (JBIC). Indonesia, the Asian Development Bank (ADB) and a private power producer on Monday announced plans to refinance and prematurely retire a 660-megawatt coal-fired power plant in West Java province, the first such deal under the ADB’s new carbon emissions reduction financing programme.U.S. Treasury and State Department officials said half of the $20 billion would come from the private sector, with seven global banks participating: Bank of America (NYSE:BAC) Citigroup (NYSE:C) Deutsche Bank (ETR:DBKGn), HSBC, Standard Chartered (OTC:SCBFF), Macquarie and MUFG.The U.S. officials said public finance would include concessional lending and equity, as well as some grants. The United States will work with Indonesia to map out a 90-day plan to set up a secretariat to run the initiative and for Indonesia to reform its policies, such as streamlining permitting and setting up a competitive procurement process to make the targets achievable.South Africa this month said the scale of funding it requires to phase out its coal was much higher than the funding mobilized through its JETP mechanism. The State Department official said it had learned some lessons and had engaged local partners from the outset to “move as fast as possible”. More

NUSA DUA, Indonesia (Reuters) -Disagreement emerged at a Group of 20 (G20) summit on Tuesday as the United States and its allies backed a resolution condemning Russia’s invasion of Ukraine, which Russia’s foreign minister dismissed as unwarranted politicisation.The summit on the Indonesian island of Bali is the first G20 leaders’ meeting since Russia sent its troops into Ukraine in February. The war, which Russia has described as a “special military operation”, has overshadowed the meeting despite calls from host Indonesia for unity and a focus on action to resolve global economic problems like inflation, and food and energy security. “Most members strongly condemned the war in Ukraine and stressed it is causing immense human suffering and exacerbating existing fragilities in the global economy,” a 16-page draft declaration said, according to a copy seen by Reuters. “There were other views and different assessments of the situation and sanctions,” said the draft, which diplomats said had yet to be adopted by the leaders.Russian Foreign Minister Sergei Lavrov, who is heading his country’s delegation in the absence of President Vladimir Putin, denounced the attempt to condemn Russia as politicisation by Western countries that had tried unsuccessfully to include it in the declaration. Lavrov said Russia had put forward an alternative view and the draft would be completed on Wednesday. A U.S. official said earlier the United States expected the G20 to condemn Russia’s war in Ukraine and its impact on the global economy. German Chancellor Olaf Scholz said there were encouraging signs of a consensus that Russia’s war against Ukraine was not acceptable. G20 ministers’ gatherings in the past have failed to produce joint declarations due to disagreement between Russia and other members on language, including on how to describe the war in Ukraine. Earlier, Ukrainian President Volodymyr Zelenskiy told the summit in a virtual address that now was the time to stop Russia’s war in his country under a plan he has proposed “justly and on the basis of the U.N. Charter and international law”.He called for restoring “radiation safety” with regard to the Zaporizhzhia nuclear power plant, introducing price restrictions on Russian energy resources, and expanding a grain export initiative.”Please choose your path for leadership – and together we will surely implement the peace formula,” he said.Lavrov, who dismissed a news agency report on Monday that he had been taken to hospital in Bali with a heart condition, said he had listened to Zelenskiy’s address, adding that the Ukrainian leader was dragging out the conflict and not listening to Western advice. Russia’s invasion of Ukraine triggered calls by some Western leaders for a boycott of the summit and for the withdrawal of Putin’s invitation but Indonesia refused to do so.Russia said earlier Putin was too busy to attend the summit and Lavrov was taking his place. ‘SAVE THE WORLD’The summit opened with a plea by Indonesian President Joko Widodo for unity and concrete action to mend the global economy despite deep rifts over the war.”We have no other option, collaboration is needed to save the world,” he said. “G20 must be the catalyst for inclusive economic recovery. We should not divide the world into parts. We must not allow the world to fall into another cold war.”The G20, which includes countries ranging from the United States, Russia and Brazil to India, Saudi Arabia and Germany, accounts for more than 80% of the world’s gross domestic product, 75% of international trade and 60% of its population.On the eve of the summit, U.S. President Joe Biden and Chinese leader Xi Jinping held bilateral talks meeting in which they pledged more frequent communication despite many differences. The meeting was the first the two had in person since Biden became president and it appeared to signal an improvement in relations after a downward spiral in recent months. Xi and Putin have grown increasingly close in recent years, and reaffirmed their partnership just days before Russia invaded Ukraine. Nevertheless China has been careful not to provide any direct material support that could trigger Western sanctions against it. On Tuesday, Xi told French President Emmanuel Macron during a bilateral meeting that China advocated a ceasefire in Ukraine and peace talks, Chinese state media reported. Macron said it was crucial for France and China to cooperate more closely to overcome the consequences of the war in Ukraine, his office said, adding that the two leaders had agreed it was urgent to de-escalate the Ukraine conflict and reaffirmed their position on preventing the use of nuclear weapons. On Monday, Biden and Xi “underscored their opposition to the use or threat of use of nuclear weapons in Ukraine” during their meeting, the White House said. Xi told Biden nuclear weapons cannot be used and nuclear wars cannot be fought, the Chinese foreign minister said in a statement.The West has accused Russia of making irresponsible statements on the possible use of nuclear weapons since its invasion of Ukraine. Russia has in turn accused the West of “provocative” nuclear rhetoric. More

World leaders used their opening speeches at the G20 summit in Bali to condemn Russia for its invasion of Ukraine and increase the pressure on Moscow to end the conflict.A draft communiqué agreed by diplomats and seen by the Financial Times said the leaders of the world’s 20 largest economies condemned the war in Ukraine and stressed it was “exacerbating existing fragilities in the global economy”. It goes on to criticise Moscow for its use of nuclear rhetoric and called for diplomacy to end the conflict. “Today’s era must not be of war,” it states.The communiqué was agreed by country delegates last night after days of wrangling between western officials and those from Russia and China. The Indian delegation played a big role in achieving consensus among member states over the wording that criticised the Russian invasion, according to three officials with knowledge of the negotiations.It will be formally adopted by G20 leaders tomorrow, the second day of the summit.In a special video address to leaders this morning, in a session dedicated to the war and its impact on global food and energy markets, Volodymyr Zelenskyy, the Ukrainian president, demanded Moscow withdraw its troops from his country.“I want this aggressive Russian war to end justly and on the basis of the UN charter and international law,” said Zelenskyy, who yesterday visited the liberated city of Kherson in southern Ukraine.Zelenskyy said his country should not be offered peace deals that would compromise its “conscience, sovereignty, territory and independence”.Russian president Vladimir Putin has stayed away from the summit and sent foreign minister Sergei Lavrov in his place. Lavrov stayed in the room during Zelenskyy’s speech and western leaders remained as Lavrov spoke, according to people present.Agreement on the communiqué comes a day after the US and China agreed to communicate more frequently over a range of issues, including climate change, economic stability and food security.At their first in-person meeting since Joe Biden became president, the US leader raised with China’s president Xi Jinping his country’s “increasingly aggressive” actions towards Taiwan. The US president later said that Antony Blinken, secretary of state, would visit China for further talks.Five more stories in the news1. FTX collapse leaves potentially 1mn creditors Companies linked to the collapse of cryptocurrency exchange FTX face at least 100,000 creditors but that number could rise to more than 1mn, according to courts filings. The collapse of Sam Bankman-Fried’s cryptocurrency empire has sparked a vast global investigation, with dozens of authorities from around the world circling the bankrupt company.2. Donald Trump dealt another blow as election denier Kari Lake loses in Arizona Republican Kari Lake lost her bid to become governor of Arizona, the latest in a series of high-profile candidates handpicked by the former president to fall short in last week’s midterm elections. Associated Press projected that Katie Hobbs, Arizona’s secretary of state, would beat Lake by a razor-thin margin to become the state’s first Democratic governor in 14 years. For the latest go to our live results map.3. Warren Buffett’s Berkshire Hathaway buys $4bn stake in Taiwan chipmaker TSMC Warren Buffett’s Berkshire Hathaway purchased a $4.1bn stake in chipmaker Taiwan Semiconductor Manufacturing in the third quarter, according to a disclosure filed to the US securities regulator yesterday. The purchase of 60mn US-listed TSMC shares marked Berkshire’s largest new stock investment during the three months to September.4. Amazon to cut 10,000 jobs The ecommerce giant plans to axe about 3 per cent of its corporate workforce in an effort to cut costs at lossmaking or underperforming units of its business, a person familiar with its plans said. The news came the same day as former chief executive Jeff Bezos pledged to give away most of his $124bn fortune.5. World population reaches 8bn The world’s population reaches 8bn people today, according to UN data, and will hit 9bn in 15 years as the number of pensioners surges. The UN research also showed the global median age had increased by about eight years to 30 since 1950 and was set to rise to 36 by 2050.

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The day aheadDonald Trump announcement The former US president has teased a “very big announcement” scheduled for later today at his Mar-a-Lago estate in Florida. Trump is expected to declare his intention to run in the 2024 presidential election, but a lacklustre performance by candidates he endorsed in the midterms poses a setback to his ambitions.Company earnings Investors will be on the lookout for clues on the health of the American consumer when the world’s largest retailer reports third-quarter earnings. Walmart, regarded as a barometer of the US consumer economy, shocked the market with two profit warnings earlier this year as it misjudged rising costs and had a rapid build-up in inventory. Hardware chain Home Depot will provide some insight into how much consumers are spending on home improvement in a high inflation environment. Economic data Economists expect the producer price index to increase by 0.4 per cent in October. PPI tracks the prices that businesses receive for their goods and services, and is seen as a leading indicator of where consumer inflation is heading in the coming months. PPI rose by 0.4 per cent in September, exceeding consensus expectations and suggesting that interest rate rises by the Federal Reserve had not yet stamped out high inflation. Observers will be watching closely, as the figure comes one day after Fed vice-chair Lael Brainard backed a slower pace of rate increases.What else we’re reading and watchingCracks in the US Treasury bond market As recession looms and most asset prices face a dramatic sell-off, the world’s most important debt market is creaking once again. With the meltdown in UK gilts exposing the vulnerability of bond markets, can the US survive a wave of selling?Logjam eases at California ports after holiday import rush A traffic jam of container ships has dissipated outside the ports of Los Angeles and Long Beach, Gene Seroka, executive director of the Port of Los Angeles, told the Financial Times in an interview. But despite improvements to wait times at the ports, the US supply chain still faces challenges.Tech lay-offs teach us a lesson about the ‘war for talent’ Once upon a time, young graduates thought they had a choice to make: they could become rich but miserable in an investment bank or law firm, or they could live without a huge salary but do something more fun. Then the big technology companies came along, writes Sarah O’Connor.How North Korea became a mastermind of crypto cyber crime Cryptocurrency theft has become one of the main sources of revenue for the regime in Pyongyang and underlines the lack of regulation of digital assets. It’s estimated that North Korea stole approximately $1bn in the first nine months of 2022 from decentralised crypto exchanges alone.Qatar’s World Cup legacy In our FT Film, we look at what the football World Cup means for Qatar, and what will happen to stadium infrastructure after the Fifa tournament. For more on the business of sport, Premium subscribers can sign up for our Scoreboard newsletter. TechnologyHTSI has rounded up five tiny gadgets with superpowers, including a pen-sized translator that doubles as a scanner and a “no-faff” crowdfunded timer. More